the state of small business lending-credit access during the recovery and how technology may change the game- pg174
small businesses are critical to job creation in the U.S economy pg174
create 2 out of every 3 net new jobs
employ half of the private sector
65% of total net job creation
are main street or sole proprietorships
small businesses were hit harder during the 2008 financial crisis, been slower to recover pg175
total net job losses was about 60%
at small firms fell by 11% with less than 50 employee
jobs declined by 14.1%
fell by 9.5% in businesses with 50-500 employees
small businesses more dependent on working capital
back to creating 2 out of 3 net new jobs
created jobs in every quarter since 2010
bank credit/bank term loans primary source of external financing pg175
helps maintain cash flow
hire new employees
purchase new inventory
grow their business
48% of business owners report a major bank as their primary financing
34% note regional or community banks is their main financing partner
bankers are having trouble finding creditworthy borrowers pg175
damaging effect of increased regulatory oversight pg176
more regulation-higher compliance costs
small businesses claim that loans are still difficult to get
allocation of scarce resources
data on the small business credit gap is limited and inconclusive raising troubling signs that access bank credit pg176
small business lending keep falling while large business lending rises
small businesses down by 20%
large businesses rise by 4%
collateral owned by small businesses was hit hard- less creditworthy today pg177
small business loans under 1 million dollars are less profitable pg178
small businesses more sensitive to swings in the economy
higher failure rates
fewer assets to collateralize
during the recovery, online lenders and marketplaces emerged pg179
disrupting traditional market for small business loans
easy to use online applications
rapid loan decisioning
greater emphasis on customer service
three models emerging in online lending
raising capital from institutional investors
hedge funds
peer-to-peer platforms
challenges and potential opportunities
cautions against regulating online lending
fear of cutting of innovation